Strategy Audit

The strategy audit provides you with the opportunity to use the conceptual, analytic, and technical skills that you acquired in this class in an analysis of a publicly listed MID-CAP company of your choice (generally, a mid-cap company is a company with a market capitalization between $2 billion and $10 billion). In answering the questions below, you are asked to adopt the role of a consultant who has been asked to provide an in-depth strategy audit.

Format requirements:
The paper is limited to 30 double-spaced pages in total, one-inch margin all around, and typed in Times New Roman 12. Make sure that you add a reference page to your paper. Supplemental exhibits and figures are to be included as appendices.

Please make sure that you answer all questions. In your analysis, please start each answer by stating the question number (e.g., 2.1.; 2.2., 2.3., etc.). Please do not retype the questions!

Grading:
Though grading will focus primarily on the depth and strength of analysis and strategic recommendations, writing form, grammar, punctuation, and professional written presentation will also be evaluated.

Relevant data and information about your chosen firm can be freely obtained using web services such as Edgar (www.sec.gov/edgar.shtml). Annual reports may be available from the firm’s own website (look for “about us” or “investor relations” tabs). Company and industry profiles can be retrieved from sources such as www.finance.yahoo.com or www.morningstar.com. You might also find the Bloomberg services helpful. Also, you can access company profiles and company data via the Online Databases provided by SIMS Library. You will find Business Source Complete, Lexis-Nexis Academic Universe, and Mergent Online to be helpful sources in your research. Those resources can be accessed via http://www.southeastern.edu/library/databases/business/index.html Research and analyze trends in your firm’s general environment and industry on: https://www.google.com/trends/

1. Does your firm have a good strategy?
   1.1. Is your firm OE?
   1.2. Does your firm’s strategy pass the five tests?
2. Can you say what your firm’s strategy is?
   2.1. What is your firm’s mission?
   2.2. What are your firm’s values?
   2.3. What is your firm’s vision?
   2.4. What is your firm’s strategy statement? What is it? Does it communicate all the necessary elements (objective, scope, advantage)? If it does not have a strategy statement, develop one that summarizes your firm’s strategy in 35 words or less.
3. Use the Strategy Diamond framework to describe your firm’s strategy. Does your firm have a coherent strategy, with all five elements reinforcing each other?
4. Describe and analyze your firm’s Business Model.
   Please complete Osterwalder’s Business Model Canvas for your firm and add the model to this section of the paper. You might find the url below helpful to create the business model:
   https://canvanizer.com/new/business-model-canvas
   4.1. Comment on the degree of internal fit of your firm’s business model. Are the nine components consistent and supportive of each other?
   4.2. Assess the business model in terms of its feasibility, desirability, viability, and adaptability.
5. Is your firm an ambidextrous organization? How well does it balance exploitation and exploration activities in the face of current challenges?
6. Analyze your firm’s corporate governance structure.
   6.1. Top Management and Board: Do the executives have potential to contribute to the firm’s strategy in terms of their knowledge, skills, background, and social connections. What stakeholder interests do they represent? Describe the board’s leadership structure. Are you satisfied with the executive compensation arrangements? Are you satisfied with the firm’s structural corporate governance arrangements in the context of the firm’s strategy and external circumstances?
   6.2. Who are the largest stockholders? What do you think are their strategic goals with respect to their equity holdings in the firm? Do you see any potential for conflicts between different types of stockholders, conflicts between stockholders and other stakeholders of the firm?
   6.3. In reviewing the press releases and news articles about your firm over the past year, can you find examples of any actions taken that, though legal, may be ethically questionable?
7. What are the opportunities and threats that your firm faces in its macro-environment (i.e. the P.E.S.T.E.L. dimensions of the firm’s general environment)? Use https://trends.google.com/ or OpenAI to identify at least one relevant trend in your firm’s macro-environment.
8. Analyze your firm’s industry environment
   8.1. Use Porter’s five forces framework and analyze your firm’s competitive environment. What are they key drivers of profitability in your firm’s industry? What environmental factors have recently influenced the strength of each of these forces?
   8.2. Identify strategic groups within your firm’s industry. Draw a strategic group map. Interpret your strategic group map. What strategically relevant insights can you draw from the strategic group map? Explain the potential existence of intra-industry performance differences.
   8.3. Given your industry and intra-industry analysis, what do you think the future holds for the industry? What do you predict will be future trends that impact industry performance? Are significant opportunities in the market untapped? What might the current competitors in the industry do to improve their competitive position?
9. Analyze your firm’s internal resources and capabilities
   Use the value chain framework, the VRIN/O framework, and the core competence framework. What internal resources does your firm possess that may give it a competitive advantage over others in its industry? Where is your firm strong? Where is your firm weak? What are your firm’s core competences? Assess the internal consistency among the different elements of your firm’s strategy (i.e. do the different elements of your firm’s value chain show internal consistency)? Is your firm’s culture a source for sustainable competitive advantage? Do you see the potential for the firm’s core competence to turn into a core rigidity?
10. Based upon your previous analyses, please create a table for your firm that outlines the key success factors (with respect to resources and capabilities) in your firm’s industry and that shows your assessment of the relative strengths of your firm’s resources and capabilities (please follow the example provided on slide 27 – chapter: internal analysis). Additionally, please follow the example provided on slide 28 – chapter: internal analysis to display your assessment in an easy to read and interpretable format. Do not forget to use this work as a basis to formulate suggestions and recommendations in the conclusion section of this paper.
11. Business-level strategy analysis.
    11.1. Describe your firm’s business level strategy. Is your firm’s business level strategy consistent with and supportive of your firm’s internal resources and capabilities (question 4)?
    11.2. How does the firm’s business level strategy position the firm in its competitive environment (vis-a-vis the five competitive forces)?
12. Corporate-level strategy analysis.
    12.1. Describe your firm’s corporate level strategy (the dimensions: product, vertical, and international scope). Is your firm’s corporate strategy appropriate, given your analysis in question 4 and question 5?
    12.2. If your firm competes in different industries, choose the dominant industry or the one that you find most strategically relevant for the firm and use only that one to answer the following question: Are any of the vertical value chain operations outsourced (contracted out)? If so, discuss some of the pros and cons of having parts of the value chain outsourced and/or outside your firm’s home country. If your firm does not outsource/offshore any of its value chain activities, would you recommend that your firm should engage in such a strategy?
13. Calculate and explain financial ratios to answer the following questions:
    (a) How profitable is your firm? (b) How efficient are the operations of the firm? (c) How effectively is the firm financed in terms of debt and equity? (d) How capable is the firm of meeting its short-term/long-term obligations? Please select ratios that appropriately reflect your firm’s strategic strengths and weaknesses.

As you have learned in FIN 653, financial ratios in isolation are not particularly interesting, therefore, please show how the ratios compare (1.) over time, (2.) with industry benchmarks, (3.) with key competitors (in your firm’s strategic group), and (4.) discuss how your firm’s ratios have been affected by/are reflective of your firm’s recent strategic changes and initiatives.

14. How well is your firm positioned for future success?
    What are the major issues that need to be addressed in your firm’s business model and at the different levels of strategy (i.e. business-, corporate-, and/or international)? What would you recommend? Please ensure that your recommendations offer a reasonable prospect of success. Be cautious when you propose high-risk recommendations. State how your recommendations will solve the problems that you identified and how your recommendations will impact the internal fit of your firm’s business model. Be sure that your firm is financially able to carry out what you are recommending. Please make sure that your recommendations are workable in terms of the organization’s competence to implement them and prevailing industry and environmental constraints and opportunities. Avoid unhelpful statements such as “the firm should do more planning” or “the firm should be more aggressive in marketing its products.” For instance, if you determine that “the firm should improve its competitive industry position,” then you need to set forth exactly how you think this should be done.